In the simplest possible terms, a business starts with an entrepreneur hatching an idea for a product or service. From there, they raise funds to manufacture or provide that product or service. Next, they begin providing services or building products (or both). Customers buy the product and/or service, and the company earns revenue. After paying their bills, employees and shareholders, the net amount of revenue is profit.
The fundamental component of this model is revenue. Without money coming in, the workings of a business shut down because there is no revenue to fuel it. To generate revenue, you need as many people as possible to buy products and services. This is where the sales and marketing aspects of a business play a key role.
Every business needs an effective sales and marketing model to bring in new business and generate revenue. The most popular and effective model is the sales funnel, which is a multistage process that leads to closing sales.
What is a sales funnel? How does it function? How does it benefit a business? Let’s define what an effective sales funnel looks like and why it works. Along the way, we will investigate a few sales funnel examples that have a proven track record of success.
Defining “The Sales Funnel”
A sales funnel is defined as a step-by-step process that a potential customer follows to become a paying customer. These potential customers start at the top of the funnel and work their way down the steps to a buying decision. Here’s a familiar example:
Old School Sales Funnel: Brick-And Mortar-Model
In the days of brick-and-mortar businesses, top-funnel people were passersby on the street. Anyone who walks in the door has moved to the second step of the funnel. Let’s say we are discussing a retail clothing store.
A customer walks in (step 2) and sees a rack marked “Clearance.” They flip through the various closeout items (step 3), choose three or four of them (step 4), and walk to the checkout counter (step 6). If your sales funnel is effective and your sales associates are well-trained, they make a purchase and you have a new customer.
Sales Funnels Take Many Shapes
The brick-and-mortar sales funnel model is fundamentally similar to that of cars, online retail, service providers and consultants. Many businesses have established sales funnels across multiple media channels to increase the volume and number of their revenue streams. It is the process, not the appearance, that matters.
Why Sales Funnels Matter
Every customer that does business with you is going on a journey. The path that the journey takes is defined almost entirely by your sales funnel. Whether you’re starting out or have a burgeoning enterprise, it is critical you make the process as streamlined as possible. This requires planning and close analysis to make sure you don’t have any “leaks.”
Leaks occur when a customer deviates from the path and takes their business elsewhere. Reworking your sales funnel to stop these leaks is a key part of establishing your funnel and regular maintenance. Every sales and marketing team needs a clear understanding of its sales funnel and its functions to generate revenue efficiently. Consider this overview of a basic sales funnel and how each step works to move customers from leads to conversion.
How Sales Funnels Work
We will begin by using the four most common terms to describe the stages of a basic sales funnel.
Stage 1- Awareness: Prospects, Opportunities and Leads
A user online clicks on your website via a link from a Google search. Once they click on that link and reach your page, they are now a prospect. Most prospects check out blog posts or product listings. The page should present several opportunities to sign up for an email newsletter or another method of contact information collection. Prospects who fill out a contact form become leads. Customers that become leads have agreed to receive your marketing materials. Phone, text or email are now available points of contact. This is all set up for Stage 2 of the funnel.
Stage 2- Interest: Sales Calls and Connections
Your sales team reaches out to leads via their provided contact information. Most sales reps will initiate contact via special offers, rebates or discounts using the email newsletter. Sometimes, sales reps will call or message the prospect directly to discuss products and services. During the conversation, they will usually offer special rates or promotions.
The primary purpose of a sales call, however, isn’t simply to sell a product or service. In a sales funnel model, the chief aim is to establish personal connections with a lead. Like all relationships, business relationships have to be built with time and trust. Some require more time and trust than others, but both components are essential nonetheless.
Excellent sales reps share their knowledge and expertise with leads to form a trusting connection. Their objective is to establish themselves as the lead’s personal expert on the product/service they offer. Not only does this lead to more conversions on the sales call, but it also ensures repeat business. When they think of your product or service needs, that sales rep becomes their go-to person. Strong relationships built during that first sales call are integral to the next stage: the follow-up.
Stage 3 – Decision: Follow-Up and Timing
Not every sales call ends in conversion: Many times the leads that connect via phone or email are not decision-makers. They often need to speak with their in-house “shot-callers” who control finances. Sometimes, it’s a partner or spouse, and other times it’s a CFO or finance manager. Whatever the case, not all leads are able to make buying decisions.
When that happens, experienced sales professionals know to attempt scheduling a follow-up. Depending on how well they built a trusting relationship during the initial call, this should be a very natural process. Now, all that needs to be done is properly timing that follow-up call for maximum effectiveness.
Follow-up should occur within a few days unless the lead specifies a time and date that works for them. It could be later that day or week, but if they make an appointment, they are planning to keep it. When leads schedule follow-up, smart professional sales reps know to do everything they can to accommodate them. After all, follow-up is the natural progression for a sale if there is no immediate buying decision. That brings us to Stage 4: Action.
Stage 4 – Action: Conversion and Sales, Obstacles and Persistence
Sales managers and other stakeholders should know if the sales funnel is functioning effectively by Stage 4. One of the oldest mottoes of sales is Always Be Closing (ABC). So, conversion from lead to a customer is all about closing. By this stage, your sales rep has established themselves as an expert. The lead should be excited about the product or service, making this point in the process decision time.
If all has gone well, it’s time to take the order. If the sales representative is effective and understands how to make the funnel work for them, closing should be easy. But, if the customer is not ready to buy, there may be an issue that needs resolution first. These obstacles usually take the form of objections to making a buying decision. The reasoning can range from cost to requiring approval from a supervisor or higher-up in charge of decisions. Rarely, however, are the reasons given for objections actual reasons.
At this point, professional sales reps begin to re-qualify the needs discussed in the initial sales call. They ask questions to determine what is motivating a lead’s hesitation or indecision. Many leads need some finessing before they will reveal the actual reasons behind their objections. While it’s rare, some leads actually don’t have the authority to make a buying decision or sign up for a service. Give them credit for doing their research on the product or service they requested to be contacted about.
Leads don’t engage a sales representative to get more information if they have no intention of making a decision. Skilled sales representatives work hard at developing their ability to overcome objections. With practice, there are few objections that can’t be overcome. When the lead needs the approval to make a decision, sales reps can invite them on a call to discuss further. It’s a bit of a pushy power move, but it has a proven track record of effectiveness.
Finally, once objections have been addressed, it’s decision time again. Either the deal closes or it doesn’t. What matters is whether your sales rep took the lead down the funnel and invited them to take action. If they can’t close the lead on the first call or the follow-up, encourage persistence. It’s also important to analyze your sales funnel and determine if you lost the customer somewhere along the path.
When all is said and done, your close rate and revenue depend on the effectiveness of your sales funnel. Sales funnel planning is critically important, and reviewing your sales funnel for leaks matters even more. Let’s examine the effective funnel planning process and some methods for plugging sales funnel leaks as we go.
How to Create a Sales Funnel
An effective sales funnel addresses all four stages of the basic model we reviewed above: Awareness, Interest, Decision and Action. Sales teams usually run multiple funnels simultaneously. We will ensure you understand the fundamentals so you can establish your own. Here’s a brief example:
- Awareness: You create a social media ad to funnel visitors to your website or landing page.
- Interest: The landing page offers something of value in exchange for contact information (lead capture).
- Decision: The content of your website, marketing materials and sales representatives prepares the lead to make a purchase.
- Action: The special offer is too good to resist, and the customer makes a purchase or signs up for service.
It may sound too good to be true, but creating a sales funnel is not a complex process. The execution is what matters. Here are the steps for creating your own sales funnel.
Step 1: Know Your Audience
Excellent market research is critical to setting up an effective sales funnel. The more you know about your primary audience, the more effective your funnel will be. Remember that you aren’t marketing to anyone and everyone. Rather, you are marketing to people and businesses that are a good fit for your product or service.
Begin by researching visitor behavior on your existing website, and determine how users currently engage with your content. Look at clicks, scrolling, and time-on-page as your primary data points. This information will give you the most complete image of who your visitors are and how they spend their time.
Step 2: Capture Your Audience’s Interest
Now that you’ve established who your audience is, you can start creating content to attract them. High-quality content curated to your target audience across all channels is best. Videos, blog posts and infographics are proven hits with potential customers, so diversify your content accordingly.
Step 3: Develop an Effective Landing Pageci
The design of your landing page will make or break your sales funnel. When visitors follow the link to get more information, they should feel compelled to provide their contact information. Make them an offer and follow it with a bold call to action. Detail exactly what they should do. Most visitors will go along with what is asked of them to take advantage of a special offer.
Step 4: Create an Email Drip Campaign
Start marketing your leads via regularly scheduled emails chock-full of amazing content. Don’t send out content too often, though. One or two messages a week is more than enough. This is an opportunity to educate your leads about your product or service.
Drip campaigns create opportunities to learn what leads want to know and what obstacles/objections you may encounter. Finish the drip campaign off with an incredible offer that inspires a buying decision and encourages the lead to take action.
Step 5: Keep in Touch
Prioritize your existing customers in your sales funnel, too. This is one of the chief sources of sales funnel leaks, and it can snowball quickly given the chance. Always follow purchases with a thank you, and periodically send them coupons or special offers. Additionally, try to get them involved in your social media channels by offering exclusive content and offers for followers.
Measuring Sales Funnel Success
Time for the big question: How do you know your sales funnel is working? Every plan needs a way to measure progress towards a goal, and sales funnel plans are no different. Measuring success is also critical for finding and stopping leaks, so this is useful information for any sales team.
The primary method for measuring the success of a sale funnel is examining the conversion rates between stages of the funnel. How many visitors are clicking Facebook ads and signing up for your email list? How many leads make purchases after clicking on an embedded link in your email and how many customers use coupon codes from exclusive social media follower offers?
Next, you want to look closely at the data for each stage of your funnel:
- Are you establishing sufficient trust with prospects visiting your landing page to provide their contact information?
- Are you taking orders from email drip campaigns and other marketing efforts?
- Does your initial content attract enough consumer attention?
- Are you seeing repeat business from first-time customers?
Knowing the answers to these important questions helps you refine your sales funnel and stop leaks along the way. Measuring success is fundamental to successfully creating an effective sales funnel. Don’t skip reading and interpreting your analytics on a regular basis unless you want to needlessly turn away more revenue.
Creating an effective sales funnel may not be complicated, but it requires time and hard work to generate steady revenue. If you want to thrive instead of surviving in a competitive market, you need to build sales funnels that are efficient and effective. Focus on developing a plan and executing your sales funnel flawlessly.
Allow relationships with leads to build over time. Give your sales reps time to help leads find solutions to their problems using your products and services. Above all, give your sales funnel time to work on your target audience. It can seem like a long wait when you are trying to grow a new business but don’t be in a hurry to see results. Patience and persistence pay massive dividends when you trust the process.
Are you looking to establish an effective sales funnel for your business? Do you have existing sales funnels that need some extra care and maintenance? Contact Selling Revolution today. We have the expertise and knowledge to help you achieve your revenue goals and dreams for your business’s future.